Fat and Happy having finished visiting family down south, I come back home and find to my astonishment that the gauntlet has been smacked about my face five ways from Sunday. Below is a letter to the Alibi editor from an irate Lisa Strout, the Director of the New Mexico Film Office.

I’m not sure who is writing the “Hoots [sic] Smalley” blog, but the recent entries regarding the New Mexico Film Industry have been inaccurate and very misleading. Contrary to the assertions made in the blog, the state’s film industry remains strong and among the most successful and respected in the world. ...

This is where I pick up the gauntlet:

I have to say that I agree with most of what is asserted here with the exception of the last line that states that I am slamming the industry. From the very first posting I have declared that I am pro-film Industry! I love what the film industry does for this state, but like any realist one must recognize deficiencies when and where they arise.

Thus far my intention is to encourage proactivity through discussion and thereby help the industry to grow in a more efficient manner. And to be clear about one thing—I have never asserted that we need to change the incentive program. Rather, I've said that private industry within the state needs to be stimulated to better capitalize on the film incentive program while it is maintained.

As for Strout’s assertion that New Mexico is third outside of New York and L.A.: This is clearly just a difference of opinion (as Louisiana has consistently bested New Mexico in the number of productions made on a yearly average). For a quick fact check on this little tidbit please feel free to examine Louisiana’s industry page and count the numbers of productions that are currently going on and the numbers about to start. Last I checked there are 17 that Louisiana currently boasts as being in production compared to our 7 that NMfilm.com currently claims. For a more extensive fact check I would challenge Strout to do as I have done in the past and check out .imdb.com and do a head count on productions completed by state and year. She will find, as I have found, that Louisiana typically outperforms New Mexico by a ratio of 3 to 1. That is to say for every one film or production made in New Mexico three are made in Louisiana.

This assertion as made by Strout stems from “An upcoming edition of a major trade publication…” I have to say that when this article is actually published, I will be happy to include it in my future analyses.

I make it a point to read as many articles about the film industry as I can. For instance, “Movie Shuts Down I-40” in the Albuquerque Journal. Not a very flattering article but it’s about the film industry so I read it, and while I feel terrible for the motorists who were stuck in traffic for three hours and perhaps more, I still stand by the film industry.

As to Strout's point about Michigan reconsidering the structure of its film incentives—yeah, it’s true! I believe I provided the blue print for that restructuring in my fourth report (and that plan was made by the state of Michigan, not me.) It appears Michigan’s intention is to beat out all other states and that includes New Mexico.

As for “fact checking?” Gotta say, I present the facts as I find them and then give my opinion, not the other way around. Believe it or not, I want to see that the industry grows. I am merely pointing out the concerns that may become future issues and challenges for the New Mexico film industry. That’s all.

Here is a person of interest that the filmmakers of New Mexico might want to emulate in some kind of way.

Tom Ortenberg, a Lionsgate Veteran and recent expatriate of the Weinstein Co., has decided to launch an independent production company that will finance films up to the magic number of $ 5 million (sounds familiar) and provide a multitude of other services ranging from consulting to distribution. Why is this so interesting and so sad at the same time?

It’s interesting because the individual is providing a business model for independent productions to actually be viable economic entities. It’s sad because Mr. Ortenberg has decided to set up shop in Santa Monica as opposed to a locale in New Mexico.

Mr. Ortenberg might utilize the studios and the work force here locally at some point in the future, because New Mexico is not his home base and does not have a claim for taxation on his business. The state of New Mexico needs this type of revenue to keep the film industry strong here.

Santa Fe and Albuquerque alone have already invested so much money in their studios, and the state as a whole has invested a significant amount more in terms of training and education; if we don’t find a way of attracting these high dollar independents to take root here, then we will have wasted millions of tax dollars on a pipe dream.

Folks, we are past the point of no return on this issue in terms of making Santa Fe and Albuquerque Studio Cities. (This is an industry term that basically regards a town or city as being on the same level as New York or L.A. in regards to filmmaking in general.) If we turn back now we will lose more than we could ever hope to recoup, leaving us with a Gross Loss of revenue and assets.

H.B. 634, the bill sponsored by our new Mayor-Elect R.J. Berry, would be a good means by which we could establish our own Independent Film Community and lead to more jobs and a better rate of collectible taxes. This along with a collective entrepreneurial might actually help to pull us out of our current economic slump (which, truth to tell, wouldn’t take much; as last I checked the current unemployment rate for New Mexico is at an incredibly low 7.5% +/- 0.2% –, well below the national average) and create a more stable film industry overall.

Still doubt me New Mexico? Utah has stolen Oren Peli from us! In an article published by Daniel Frankel on the website [link] Mr. Frankel describes the latest phenom of the new age of filmmaking, Oren Peli, as having made his most recent feature film for $11,000.00. This low-budget film from the former Israeli videogame maker has caught the eye of Paramount, and Paramount is now rewarding Mr. Peli with a significantly larger budget for his next movie Area 51.

The hook is that he has to go to Utah to do it because they have better incentives than we do. Now let me be clear, I don’t make the decisions on who has the better incentives among the states. The Producers and Studios do. Below is a rough breakdown of Utah’s incentives for film. I’ll let you all be the judge and tell me if we can find a way to up the ante.

The Utah Film Commission offers three incentives for film and television productions.

The Motion Picture Incentive Fund is a 20% post performance rebate of dollars spent in the State of Utah. Starting July 1, 2009, Utah will also offer a 20% tax credit. For productions under one million dollars, there is a 15% cash rebate film incentive available.

The Sales and Use Tax Exemption is an exemption on TV, video and film equipment. The Transient Room Tax is a rebate on hotel accomodations.

Okay, for anyone out there that thinks my perspective about New Mexico’s Film Incentives not being competitve is unfounded, I present the following: A letter from Michigan State Senator Glida Z Jacobs, and Michigan’s ADVERTISED proposal for the expansion of their Michigan Business Tax Act which can be found at the Michigan Legislature website under Document - Section 208.1455.

While I don’t blame Michigan for being competitive I do say that if we hope to compete we as New Mexicans need to change the paradigm and further reinforce our incentives with private enterprise. Utah and Oregon are doing similar legislation that is leaving us in the dust.

Outside of New York and L.A. we are currently ranked sixth.

Let’s get to work New Mexico!

*******************************************************

Let Michigan's Film Incentives Work

May 13, 2009 by Senator Glida Z Jacobs

Last year, the Michigan Legislature approved the country’s most aggressive incentive package for the film and digital media industries with overwhelming support. Now these incentives are under fire from some who say they are “too successful.” Those arguments are shortsighted. Instead of capping these incentives I believe that we should let them continue working and bringing new jobs and industries to Michigan.

Michigan is reaping benefits from these new film incentives. We’ve seen 136 applications for productions, 71 were approved and 35 were completed by the end of 2008. All of that happened in just the first year of the film incentives.

Just this year we have heard about new movie deals and new studios coming into our state. Southfield-based Parallax Productions signed a deal with New Castle Entertainment to create several movies worth as much as $60 million. In early April a new $146 million dollar studio complex was announced for Allen Park. Two other studios are slated to open in the next year, and short term training programs are being offered by community colleges and universities.

Yes the state has collected taxes and yes we have paid incentive money back to these productions. This is what film incentive critics focus on: the money the state pays back to productions. What the critics fail to consider is the money that comes into our communities from these same productions. The local trophy shop that provided trophies for a movie about high school students, the hotel rooms and homes that are rented for actors, the locals who are hired for extras, the caterers that provide food, and the list will only grow longer if we just let these film incentives work. Hollywood is very good at acting quickly, investing heavily, and promoting globally. We are courting this industry to jar our state off of its sole dependence on the auto industry and it is working.

At least one of our neighbors, Ohio, is looking at our film incentives and trying to figure out how they can do better. Ohio is facing a $7.5 billion deficit over the next two fiscal years. And yet they are seriously trying to adopt any incentive package that might compete with ours. Ohio lawmakers understand that film incentives could be a critical investment to diversify their economy.

That is the point of the film incentives and that is what they are doing for Michigan: diversifying our economy and creating new jobs and opportunities. The film industry is animation and special effects studios, digital media, and gaming consoles. These are the jobs of the future that will keep our young people here and draw talented newcomers into Michigan.

Michigan Film Production Incentives * Information Disclaimer 40% Tax Rebate (refundable tax credit) For Michigan Production (42% in Core Cities) Out of State Below The Line wages are pegged at 30%. Above The Line 40%. 40% refundable tax credit against Michigan Business Tax (MBT) liability for qualified film or digital media pre-production, production, and postproduction costs incurred in Michigan. Alternatively could be claimed against Michigan income tax withholding tax liability. Refundable and assignable (transferable). This is a “refund” or “tax rebate” equal to 40% of qualified production expenditures, not a credit against taxes owed. Additional 2% credit in core communities. Wages paid to non-Michigan residents eligible as a qualified expenditure capped at $2 million per person per production. $50,000 minimum spend. No project cap. No annual cap. No sunset. Income Tax Exemption for Reinvestment in Michigan Productions Allow an income tax deduction equal to all or a portion of a gain realized from an equity investment of at least $25,000 in an qualified production in Michigan, if the initial investment plus the gain, or a portion of the gain, is reinvested in a new qualified production within one year. Sunset on September 30, 2015.

Infrastructure Development Incentives Film & Digital Media Infrastructure Investment Tax Credit Investment of $250,000 or more in Michigan film or digital media production infrastructure (such as studios, equipment, or other facilities) eligible for a 25% tax credit against MBT liability. Credit is assignable or may be carried forward. Total credits allowed limited to $10 million annually. Credit reduced for brownfield credits claimed for same investment. Sunset on September 30, 2015. MEGA Eligibility for Film & Digital Media Production Companies Authorize film and digital media production companies to apply for and receive tax credits issued by the Michigan Economic Growth Authority (MEGA) against MBT liability.

FINANCING INCENTIVES Film and Digital Media Investment Loans (not currently funded) Authorize the Michigan Strategic Fund to offer loans from the Jobs for Michigan Investment Fund (part of 21st Century Jobs Fund Program) for up to $15 million per qualifying film and digital media productions in Michigan. Loans can be 0% with backend participation by the Jobs for Michigan Investment Fund in lieu of interest. Terms of loans are negotiated and production budget must be at least $2 million. A guarantor for the loan must be in place. Production must be wholly or substantially shot in Michigan. Qualified production company eligible for both loan and 40% production tax credit.

Choose Michigan Film and Digital Media Production Loan Program (not currently funded) Authorize a qualified production company to receive all or a portion of the value of discounted tax credits the company is eligible to receive in the form of a loan from the Jobs for Michigan Investment Fund approved by the Michigan Strategic Fund. Credits would be pledged for the repayment of the loan. Loans would be provided an interest rate of up to 2%. Minimum loan amount would be $500,000. No loan would be greater than the discounted value of the tax incentives pledged. Production company would be responsible for loan repayment regardless of performance of primary tax incentive.

Capital Access Program for Film and Digital Media Producers (not currently funded) Authorize film and digital media production companies to participate in the capital access program established by the Michigan Strategic Fund under the 21st Century Jobs Program. Participating banks throughout Michigan would offer CAP loans directly to production companies that need credit enhancement. Similar to a loan loss reserve fund, the bank, the production company, and the Michigan Strategic Fund pay a small premium into a reserve that makes it possible for the company to receive fixed asset and working capital financing in the form of a private loan from the bank.

Workforce Development Incentives Film & Digital Media Worker Job Training Tax Credit 50% refundable MBT tax credit for expenditures incurred by an eligible production company to provide on-the-job training for Michigan residents in advanced below-the-line crew positions on qualified productions. Expenditures eligible for job training tax credit could not also be claimed for the 40% production tax credit. Sunset on September 30, 2015.

Enhance Michigan Film Office Enhance Michigan Film Office Formalize, update, and enhance the powers, duties, and functions of the Michigan Film Office and Michigan Film Advisory Commission. Transfer Office to the Michigan Strategic Fund with staff support and related resources provided by the Michigan Economic Development Corporation. Change name of Michigan Film Commission Advisory Commission to the Michigan Film Office Advisory Council and increase terms of office for members of Council from 3 to 4 years with staggered terms. Prohibit authorized claims of agency or employment relationship with the Film Office. Repeal Sections 21 and 22 of the History, Arts, and Libraries Act. Increase Financial Support for Michigan Film Office Create the Michigan Film Promotion Fund to support and provide additional dedicated funding to support the Michigan Film Office. Charge a 0.5% application and redemption fee for all film-related tax credits, with proceeds deposited in the Michigan Film Promotion Fund to support the Michigan Film Office. Require 50% of any state earnings on a loan or investment in a production from the Jobs for Michigan Investment Fund be deposited in the Michigan Film Promotion Fund. * Information Disclaimer: This is a Preliminary summary of proposals. Verify info with the Michigan Film Office. For The Michigan Film Office Text of the Michigan Film Incentive Bills go here: [link]

Coffee, Eggs Benedict who could ask for anything more? Friday was an exciting day! Our President won the Nobel Peace Prize, not for what he has done, for what he hopes to do. The teachers of New Mexico stormed the round house.

Now I wasn’t in Norway or D.C., but I was in Santa Fe. That’s where I saw the AFT (American Federation of Teachers) along with a few other unions form a sizable mob that stormed the front steps of the Round House.

What I found interesting was the solidarity that I.A.T.S.E Local 480 and 423 leaders and members showed in their support of the teachers. Whether through providing a launching point from their meeting hall at the New Mexico Film Museum or running waters to the kids and seniors who were incensed enough to show up and protest the idea of our legislators that cutting off the funding to public education is actually a good idea.

Then as the procession marched its way up to the Round House I noticed that the same I.A.T.S.E. leaders and members were the same ones setting up the P.A. system for the teachers so their leadership could take the stage and speak.

At the end of it all these same guys and gals from I.A.T.S.E were there cleaning up the mess of signs and various bits of litter; leaving the Round House as pristine as it started out before the protest.

To say the least I was very pleased by the decorum of these men and women and their willingness to extend themselves beyond the scope of their own Union’s worries and concerns.

Why, you might ask? The answer is simple, for years I have heard that I.A.T.S.E members are stuck up, crass, and rude. Having seen them in action for the first time I have to say that this is an unfair treatment that they have received over the years. These people are just honest hard working folk who want what we all want I think. A better life and they are not afraid to work for it.

So, with that said. Is it enough? No, the guys and gals of I.A.T.S.E. have an uphill battle against them. Right now the Film Industry here is completely dependent on outside revenue. The profits from spending that revenue here never come back in the form of dividends for the betterment of our state. Sure the state makes money while the New York and L.A. types are here spending their capital, but once the movie is made those profits belong to them.

What then can be done to make the Film Industry more of a firmament in our cities and our state overall? What is required is personal investment. Independent Production Companies are a start. However, if you ask around you will find that none of these local producers are SAG, WGA, or DGA signatories; or if they are they aren’t saying it very loud.

Okay, so let me back up a second: SAG is the Screen Actor’s Guild, WGA is the Writer’s Guild of America, and DGA is the Director’s Guild of America. What is a Signatory? The Signatory is the individual or the company that has signed an agreement with one or more of the above mentioned bodies and agrees to hold themselves accountable by the terms and conditions of the contract.

What does signing one of these contracts do? It is a sign that the given production that is a signatory is professionally produced, thus a more credible source of content for Distribution Companies to take a chance in investing in (i.e., purchasing) the final product and display across the nation.

What all this means is that the membership, specifically, of I.A.T.S.E. local 480 will need to do and the surround film communities of Santa Fe, Albuquerque, and Las Cruces will need to do as well is create long term business models that work with the various other guilds and create and establish the businesses in a perpetual sense that will more fully allow for their own growth and development. This is where we need to help these folks as a state and put up the cash that will allow them to have the seed money necessary to fulfill their future financial obligations and actually create a sustainable industry.

Coffee, three eggs over-medium and bacon; hangover recovery process is in full swing. Question: Where have all the film jobs gone? Answer: Michigan, Louisiana, Georgia, Iowa; and then, if we’re lucky, New Mexico.

Has it always been this way? Actually, no. Used to be outside of New York and L.A. the jobs were in Louisiana, Connecticut and New Mexico, and in that order too. No lie, I kid you not.

Is there light at this abysmally dark tunnel? Actually, yes. Iowa recently made the news when their Governor, Chet Culver, recently nixed the film incentive program there. Bringing New Mexico up to fourth outside of New York and L.A., A bitter sweet victory for us considering we used to be third and it took a whole lot of bungling and corruption by the Iowa Film Office (which is currently under investigation) to pull us out of fifth place.

How do I know this? Well, I called Chet Culver’s office and spoke with a very nice lady who sadly confirmed that their film office is under investigation and that the Iowa Film incentive program is temporarily suspended. Unfortunately she could not define how long temporarily meant. Bad news for them, good news for us; sadly, I feel for them. The Hollywood Machine is a daunting business for anyone to comprehend let alone deal with effectively.

Any other good news out there? Again the answer is yes. Michigan is looking at reducing their incentive program from a 42 percent refund to an undisclosed amount. A big deal considering in 2008 they had 28 films shot there, one of those films being Clint Eastwood’s Gran Torino. Hella good movie by the way.

But who is the dark that is not making the news and why? Georgia is going strong and offering a combined 30 percent state income tax credit and also offering a pass on sales tax that saves the productions that go there up to 8 percent in addition.

Is Georgia truly that competitive with New Mexico? Sadly, yes. One of the biggest movies that is coming here is spreading its locations around and looks to only be here for a couple of weeks before packing up and heading off to Georgia for the remainder and the majority of its shooting schedule.

Is this good or bad? Answer, hard to say. If the production decides to keep the majority of its crew that it hires here and take them all to Georgia this could be great. If not, our boys and girls who so hard to do what they do will have to fend for themselves until they get another job. Thankfully, more than one movie is expected to head our way because of the fallout from Iowa.

So what is our overall prognosis as a state? Not so great but we’re getting better.

Reporting from the Sunshine Café, this is Hoot Smalley. See you all at the Marble Brewery; they open at 3 pm on the weekdays.

Hoot Smalley here, and I am just an average Joe with a favorable opinion in regards to the filming in New Mexico. So, as we all know or should know by now Richard J. Berry won the Mayoral race in ABQ last night. When I first heard the news, I cringed. Then I proceeded to drink. Then I crashed at a friend’s house and woke up to rain drops slamming against her roof.

I faked sleeping until the rain stopped and left to go get a cup of Joe at my favorite neighborhood coffee shop. My neighborhood incidentally ended up experiencing yet another drug raid. We don’t know what that neighbor of ours is doing in his back yard (we suspect he is cooking meth), but this is the second raid in two weeks. Alas, I digress.

So, I get to the coffee shop and I find myself cringing yet again. The morning paper, The Albuquerque Journal, has confirmed that Berry has won.. This is just what I needed to see as I begin my hangover recovery process, which is a cup of coffee, three eggs over medium and bacon. I begin reading the article in depth and quickly kill the coffee supply that is available, and I begin to ask myself who is this guy Berry.

I’m no slouch when it comes to knowing who is who on the political scene, but when I think back to when the mayoral race began, I can’t really place where Berry came from. All I knew or really ever known about the guy is that he is a Republican, who somehow became a State Representative in 07. At this point I decide to do research and quickly find that he is a relative newcomer in terms of politics and surprisingly he voted for a bill that initially looked to be quite promising: HB 634 Filmmakers Production Fund.

This bill would have allowed the state to invest up to $5 million in productions and as it reads would not have negatively impacted the incentive program that we currently have for the big time productions. It looks as though the bill ultimately died and was never signed into law, but I find that the existence of a bill that could have been favorable to the Independent Film Industry (had it been worded better) on Berry’s voting record is promising. The bill, by the way, was sponsored by Rep. Ben Lujan Sr.

So perhaps my day will be all the sunshine and rainbows that it promises to be now that the rain has stopped. And, if he can make meth-house on my block disappear that would be great!